Are Geothermal Resources a Mineral Right in West Virginia?
Total Page:16
File Type:pdf, Size:1020Kb
Volume 120 Issue 2 Article 10 December 2017 Getting Steamy with Property Law: Are Geothermal Resources a Mineral Right in West Virginia? Joshua A. Lanham West Virginia University College of Law Follow this and additional works at: https://researchrepository.wvu.edu/wvlr Part of the Environmental Law Commons, and the Natural Resources Law Commons Recommended Citation Joshua A. Lanham, Getting Steamy with Property Law: Are Geothermal Resources a Mineral Right in West Virginia?, 120 W. Va. L. Rev. (2017). Available at: https://researchrepository.wvu.edu/wvlr/vol120/iss2/10 This Student Note is brought to you for free and open access by the WVU College of Law at The Research Repository @ WVU. It has been accepted for inclusion in West Virginia Law Review by an authorized editor of The Research Repository @ WVU. For more information, please contact [email protected]. Lanham: Getting Steamy with Property Law: Are Geothermal Resources a Mine GETTING STEAMY WITH PROPERTY LAW: ARE GEOTHERMAL RESOURCES A MINERAL RIGHT IN WEST VIRGINIA? I. INTRODUCTION ...................................... ...... 658 II. BACKGROUND ............................................. 660 A. The FuturePotential of West Virginia'sNewfound Geothermal Resources .................................... ..... 661 B. What Is a Geothermal Resource, Anyway?........... ............ 662 1. Direct Use of Geothermal Resources at the Surface .... ..... 664 2. Flash and Dry Steam Methods ............................ 664 3. Binary Cycle Systems ................................. 665 4. Enhanced Geothermal Systems ................. ...... 665 C. A BriefSurvey of Geothermal Resources Ownership Classifications in the United States ......................... .............. 666 1. Mineral Classification ....................... ...... 667 2. Water Classification .................................... 669 3. Classification Based upon Temperature or Depth ..... ..... 669 4. Sui Generis Classification ................... ........ 670 D. A Look at West Virginia Case Law ................. ...... 670 1. The Term "Mineral" in a Severance Deed Is Presumed to Include All Inorganic Substances ....................... .... 670 2. Rules of Construction Used to Interpret Conveying Instruments that Sever the Surface and Mineral Estates .................. 672 3. Surface Estate Defined ................................ 673 4. The Doctrines of Reasonable Use and Necessity ..... ...... 674 5. Original Parties' Knowledge and Contemplation of Mineral in Dispute ............................. ............. 677 III. ANALYSIS .................................................... 678 A. Geothermal Resources Fall Within the Comprehensive Term "Mineral" Unless Plain Language of the Severance Deed Indicates Otherwise ......................................... 679 B. Owners of the "Surface Only " Cannot Claim Title to Geothermal Resources ......................................... 681 C. The Doctrines ofReasonable Use and Necessity Do Not Preclude Broad MineralEstate Owners from Extracting Geothermal Resources .................................... ..... 682 657 Disseminated by The Research Repository @ WVU, 2017 1 West Virginia Law Review, Vol. 120, Iss. 2 [2017], Art. 10 658 WEST VIRGINIA LA W RE VIEW [Vol. 120 D. It Is Immaterial Whether Geothermal Resources Were a Known or ContemplatedResource at the Time the Mineral and Surface Estates Were Severed ...................................... 685 E. Limiting or Qualifying Language Should Continue to Limit the Scope of the Term "Mineral"in Severance Deeds........... ........... 686 IV. CONCLUSION ................................................... 687 I. INTRODUCTION West Virginia has long been an innovative and leading energy- producing state.' Before West Virginia became its own state, the area that would later become West Virginia produced commercial quantities of salt brine.2 In 1815, while drilling for salt, Captain James Wilson struck the United States' first- ever natural gas well in Charleston, West Virginia.3 In modernity, West Virginia's natural gas market has once again flourished as horizontal fracturing has allowed West Virginia to access more of its abundant natural gas resources.4 West Virginia's petroleum oil reserves, another original by-product of salt production,' have also been commercially extracted throughout West Virginia's history.' Without a doubt, West Virginia's most lucrative and iconic natural resource has been its vast reserves of bituminous coal.' Recently, however, researchers discovered that West Virginia has another valuable resource deep beneath its mountains and valleys.' According to I See West Virginia:State Profile and Energy Estimates, U.S. ENERGY INFO. ADMIN. (July 20, 2017), https://www.eia.gov/state/?sid=WV (stating that West Virginia ranked fourth in total energy produced in 2013). 2 See History of West Virginia MineralIndustries - Salt, W. VA. GEOLOGICAL & EcON. SURV. (July 19, 2004), http://www.wvgs.wvnet.edu/www/geology/geoldvsa.htm. See First Natural Gas Well, WVEXP.cOM (Dec. 10, 2005), http://www.wvexp.com/index.php/FirstNaturalGasWell. 4 See Casey Junkins, West Virginia naturalgas production numbers 'shocking', WASH. TIMES (Jan. 23, 2016), http://www.washingtontimes.com/news/2016/jan/23/west-virginia-natural-gas- production-numbers-shock/ ("Overall, with traditional vertical drilling included with horizontal fracking, West Virginia produced more than 1 trillion cubic feet of natural gas in 2014."). 5 See History of WV Mineral Industries - Oil and Gas, W. VA. GEOLOGICAL & EcON. SURV. (July 16, 2004), http://www.wvgs.wvnet.edu/www/geology/geoldvog.htm. 6 See West Virginia State Profile and Energy Estimates: Profile Analysis, U.S. ENERGY INFO. ADMIN. (July 20, 2017), https://www.eia.gov/state/analysis.cfm?sid=WV ("The state's first oil field began producing just before the Civil War, and peak production of 16 million barrels per year was reached in 1900."). See generally History of West Virginia Mineral Industries - Coal, W. VA. GEOLOGICAL & EcoN. SURv. (June 20, 2017), http://www.wvgs.wvnet.edu/www/geology/geoldvco.htm. 8 See First Google. Org-funded geothermalmapping reportconfirms vast coast-to-coastclean energy source, SMU (Oct. 25, 2011) [hereinafter SMU Study], https://researchrepository.wvu.edu/wvlr/vol120/iss2/10 2 Lanham: Getting Steamy with Property Law: Are Geothermal Resources a Mine 2017] Getting Steamy with Property Law 659 a recent study funded by Google and conducted by a group of Southern Methodist University ("SMU") scientists, West Virginia is uniquely situated as an eastern state that has a tremendous amount of potentially viable geothermal resources.' The study found that "the largest geothermal hot spot in the eastern United States" is located in West Virginia.'o The SMU study also "revealed the existence of geothermal resources under the state of West Virginia equivalent to the state's existing (primarily coal-based) power supply."" The study shows that West Virginia has "tremendous potential" to utilize geothermal resources 2 in the future.' 3 How will West Virginia's existing law handle this newly discovered, valuable property right? West Virginia's widespread severed surface and mineral estates make addressing the issue of property ownership a far more complex endeavor than it would be in other states. ' There are hundreds, if not thousands, of variations on how mineral conveyances, reservations, and exceptions have been drafted over the past two centuries in West Virginia. '" To further complicate the matter, West Virginia, like most eastern states,' 6 has not yet contemplated geothermal resources as a valuable legal right.' 7 https://www.smu.edu/News/201 1/geothermal-24oct201 I ("Areas of particular geothermal interest include the Appalachian trend (Western Pennsylvania, West Virginia, to north Louisiana). 9 Id. i0 Andrew Chiasson, The Economic, Environmental, and Social Benefits of Geothermal Use in the Eastern United States, GEO-HEAT CTR. Q. BULL., Aug. 2011, at 4, http://www.oit.edu/docs/default-source/geoheat-center-documents/quarterly-bulletin/vol-30/30- 2/30-2-bull-all.pdfsfvrsn=4 ("West Virginia sits atop geothermal hot spots, some as warm as 3920 F at depths as shallow as five kilometers .... If this geothermal energy could be feasibly tapped, the state could become a significant producer of geothermal energy for the region."). I SMU Study, supra note 8. 12 Throughout this Note, the term "geothermal resources" means "underground reservoirs of hot water or steam created by heat from the earth, as well as subsurface areas of dry hot rock." Craig D. Galli et al., Getting into Hot Water: CurrentHot Topics in Geothermal Development, 55 RoCKY MTN. MIN. L. INST. 6-1, § 6.01 (2009). 13 SMU Study, supra note 8. 14 Faith United Methodist Church and Cemetery of Terra Alta v. Morgan, 745 S.E.2d 463, 469 (W. Va. 2013) (noting that "[t]here are a significant number of surface deeds in West Virginia"); The Complicated Mineral Rights Issue (Mess?) in WV, MARCELLUS DRILLING NEWS (Mar. 24, 2014), http://marcellusdrilling.com/2014/03/the-complicated-mineral-rights-issue-mess-in-wv/ ("Mineral rights in West Virginia are complex, to say the least .... Statewide there are 352,247 owners of mineral rights that have been separated from surface rights."). 's Watt v. W. Nuclear, Inc., 462 U.S. 36, 42-43 (1983) (observing that the term "minerals" in conveyances has been used in many different ways over the years). 16 In this Note, the phrase "eastern states" is referencing those states east of the Mississippi